Did a free quarterly community advertising guide qualify for Florida's sales-tax exemption for a shopper publication?

Plain-English summary

Florida found that a free quarterly community guide could qualify for the shopper-publication exemption, but the conclusion was conditional because the publication had existed for only six months.

The guide was a community publication, distributed free by mail, issued quarterly, and consistent in title and general content. The two reviewed editions devoted 70% and 65% of their copy to advertising across a broad range of products and services.

The remaining test had to be proved over a full 12-month period: advertising needed to exceed 50% of the copy in more than half of the editions published during that period. If the guide ultimately failed that or any other requirement, its sale or free distribution would become taxable.

An exempt producer could also use the rule's blanket exemption certificate for printing and for paper, ink, and other taxable inputs that became part of the publication.

What this means for you

Community publishers

Track advertising percentage issue by issue for a full year. Two qualifying issues were not enough for an unconditional determination.

Printers and accountants

Keep the blanket exemption certificate and verify that purchased paper, ink, or printing becomes part of a publication that continues to satisfy every shopper requirement.

Common questions

Was the guide exempt immediately and unconditionally? No. The Department conditioned its conclusion on satisfying the 12-month advertising test.

How much advertising was required? More than 50% of the publication's copy in more than half the editions during a 12-month period.

Could the guide be distributed free? Yes. Free distribution was one of the required characteristics.

Could printing inputs be purchased exempt? Yes, with the blanket certificate described in the rule, while the publication qualified.

Citations and references

• Fla. Stat. § 212.05(1)
• Fla. Stat. § 212.06(16)(a)
• Fla. Stat. § 212.08(7)(w)
• Fla. Admin. Code R. 12A-1.008(10)
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-018

Original ruling text

SUMMARY

A determination that a publication qualified for exemption
from the imposition of sales or use tax under s.
212.08(7)(w), F.S., and Rule 12A-1.008(10), F.A.C., since
it was: (1) a community publication; (2) distributed free
of charge; (3) published on a regular basis (quarterly);
(4) consisted primarily of advertising of a broad range of
products and services; (5) was distributed by mail; and,
(6) had conformity as to title and general nature of
content from issue to issue, for the issues examined.

Apr 22, 1999

Re: Technical Assistance Advisement TAA-99A-018
Sales and Use Tax
Eligibility of Publication for Exemption as "Shopper"
Sections 212.05(1), 212.08(7)(w), F.S.
Rule 12A-1.008(10), F.A.C.

Dear :

This letter is a response to your request dated XX, for
the Department's issuance of a Technical Assistance Advisement
("TAA") concerning the above referenced party and matter. Your
request has been carefully examined and the Department finds it
to be in compliance with the requisite criteria set forth in
Chapter 12-11, F.A.C. This response to your request constitutes
a TAA and is issued to you under the authority of section
213.22, F.S.

I. FACTS PRESENTED

Publisher, as a sole proprietor, prepares a quarterly
publication the purpose of which is to assist new and existing
residents in locating the goods and services they may need in
their local community. The Fall 1998 and Winter 1999 editions
of XXX, the only issues distributed as of the date of

Publisher's request for the issuance of a TAA, have been
presented to us for review. These issues, 5-1/2 inches x 8-1/2
inches in size, contained 20 and 24 pages, respectively,
inclusive of the front and back covers. A commercial printer is
utilized to produce the final product.

The preparation and distribution of XXX is financed by its
advertisers, which are local businesses. Advertisers are asked
not to request the inclusion of coupons with their ads.

In the Fall 1998 issue of XXX, approximately seventy
percent of the copy was devoted to advertising (sixty-one
percent for dining establishments, nine percent for other types
of businesses). In the Winter 1999 issue, approximately sixtyfive percent of the copy was devoted to advertising (forty-two
percent for dining establishments, twenty-three percent for
other types of businesses). The balance of the copy was devoted
to trivia facts, quotable quotes and features that Publisher
believes are of general interest to the area's population.
Publisher has stated that Guide "must contain at least 60%
advertising to continue publishing."

Guide is mailed, free of charge, to all occupied addresses
in a three zip code area in and around Royal Palm Beach,
Florida.

II. REQUESTED ADVISEMENT

Is the publication and distribution of Guide, within the
State of Florida, subject to sales and use tax? If subject to
taxation, what is the appropriate tax base?

III. APPLICABLE LAW

Section 212.05, F.S., provides, in pertinent part, that:

... every person is exercising a taxable privilege who
engages in the business of selling tangible personal
property at retail in this state,..., or who rents or
furnishes any of the things or services taxable under this
chapter, or who stores for use or consumption in this state

any item or article of tangible personal property....
(E.S.)

Section 212.05(1), F.S., further provides that for such
privilege a tax is levied, in the case of sales:

(a)1.a. At the rate of 6 percent of the sales price of each
item or article of tangible personal property when sold at
retail in this state,....

Alternatively, for publishers, in cases of use versus sale,
Section 212.06(16)(a), F.S., provides:

... the use by the publisher of a newspaper, magazine, or
periodical of copies for his or her own consumption or to
be given away is taxable at the usual retail price thereof,
if any, or at the "cost price."

Section 212.08(7), F.S., exempts the sale or use of certain
items of tangible personal property from taxation, including:

(w) Certain newspaper, magazine, and newsletter
subscriptions, shoppers, and community newspapers.
... Also exempt are free, circulated publications that are
published on a regular basis, the content of which is
primarily advertising, and that are distributed through the
mail, home delivery, or newsstands. (E.S.)

Rule 12A-1.008(10), F.A.C., provides, in relevant part:

Effective July 1, 1991, "Shoppers" and "community
newspapers" which satisfy the criteria provided in this
subsection are exempt from tax.

(a) The term "shopper" means a community publication made
available to its coverage area by way of distribution
through the mail, home delivery, or newsstands free of
charge, which is published on a regular basis (usually
daily or weekly) and which consists primarily of
advertising of a broad range of products and services
offered by several unrelated types of businesses or

individuals, and which has conformity as to title and
general nature of content from issue to issue, and may
contain in each issue at least some news of general or
community interest, community notices, and could also
contain editorial comment or articles by different authors.
...
(c) In order to satisfy the "primarily advertising"
requirement of a "shopper"..., more than 50 percent of the
publication's copy must be devoted to advertising in more
than one-half of the published editions during any 12-month
period.... (E.S.)

IV. APPLICATION OF LAW TO FACTS

In general, as Sections 212.05(1)(a) and 212.06(16)(a),
F.S., provide, since publications are tangible personal
property, their sale or use in the State of Florida is taxable.
Therefore, the sale or use of Guide would be taxable under the
general provisions of the law, unless a specific statutory
exemption from taxation applied. The exemption provisions to be
considered in the case of Guide would be those set out in
Section 212.08(7)(w), F.S., and Rule 12A-1.008(10)(a) and (c),
F.A.C.

In construing these statutory exemption provisions, the
Department must adhere to, and be guided by, the long-standing
and fundamental principle of statutory construction, established
by the Florida Supreme Court. Such principle mandates that
exemptions from, or exceptions to, taxing statutes are special
privileges granted by the legislature and must be strictly
construed against the taxpayer and in favor of the administering
agency. See Asphalt Pavers v. Dept. of Revenue, 584 So.2d 55, at
57 (Fla. 1st DCA 1991); Dade County Taxing Authority v. Cedars
of Lebanon, 355 So.2d 1202, at 1205 (Fla. 1978), reh. den. April
5, 1978.

The essential requirements of the exemption provisions,
which must all be satisfied, are that the publication: (1) be a
community publication; (2) be distributed free of charge; (3) be
published on a regular basis; (4) contain primarily advertising
of a broad range of products and services offered by several

unrelated types of businesses; (5) be distributed via specified
means; and, (6) have conformity as to title and general nature
of content from issue to issue.

You indicate that Guide is being distributed, on a
quarterly basis, and free of charge, to all occupied addresses
in a three zip code area in and around Royal Palm Beach.
Therefore, requirements (1), (2) and (3) would be satisfied. In
regard to requirement (4), Rule 12A-1.008(10)(c), F.A.C.,
provides that the content goal of "primarily advertising" will
not have been reached unless "more than 50 percent of the
publication's copy" is devoted to advertising in "more than onehalf of the published editions during any 12-month period."
(E.S.) From the information made available to the Department,
it appears that requirement (4) would be satisfied. For
example, (a) the Fall 1998 edition of Guide contained seventy
percent advertising; (b) the Winter 1999 edition contained
sixty-five percent advertising; and, (c) Publisher has asserted
that Guide "must contain at least 60% advertising to continue
publishing." However, since the Department has been provided
copies of Guide covering only a six-month period, and construing
this exemption provision narrowly in adherence to the principles
of statutory construction previously discussed, an unqualified
conclusion as to the satisfaction of requirement (4) cannot be
rendered. The Department recognizes the fact that Guide has not
yet been published for a continuous twelve-month period.

Since Guide is being distributed by one of the means
specified in section 212.08(7)(w), F.S., the mail, requirement
(5) would be satisfied. A comparison of the Fall 1998 and
Winter 1999 issues of Guide submitted to us demonstrates a
conformity as to title and general nature of content from the
first issue to the second. Assuming these issues are a
representative sample of all issues, requirement (6) would be
satisfied.

V. Conclusion

Assuming requirement (4) is ultimately satisfied, as
discussed above, Guide would qualify for exemption from sales
and use tax. However, you should be advised that should the

publication and distribution of Guide ultimately fail to meet
requirement (4), or any one of the other requirements for
exemption discussed above, the exemption would be lost. If the
exemption is lost, the publication and distribution of Guide
would be taxable at either its sales price, if sold; or, at the
amount required by Section 212.06(16)(a), F.S., if distributed
without charge.

In consideration of the foregoing, please be reminded that
Rule 12A-1.008(10)(d), F.A.C., provides that the producer of a
publication exempt under Rule 12A-1.008(10)(a), F.A.C., may
exempt the purchase of printing of the publication or the
purchase of taxable items such as paper and ink which go into
and become a part of the publication if a blanket exemption
certificate of the format suggested therein is submitted to the
relevant entities from whom such purchases are made. A copy of
this Rule was provided to you with our previously issued letter
of technical advice, dated November 23, 1998.

This response constitutes a Technical Assistance Advisement
under section 213.22, F.S., which is binding on the Department
only under the facts and circumstances described in the request
for this advice, as specified in section 213.22, F.S. Our
response is predicated upon those facts and the specific
situation summarized above. You are advised that subsequent
statutory or administrative rule changes or judicial
interpretations of the statutes or rules upon which this advice
is based may subject similar future transactions to a different
treatment from that which is expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of section 213.22,
F.S. Your name, address, and any other details that might lead
to identification of the taxpayer must be deleted by the
Department before disclosure. In an effort to protect the
confidentiality of such information, we request you notify the
undersigned in writing within 15 days of any deletions you wish
made to the request or this response.

Sincerely,

Anne Townsend
Senior Tax Specialist
Technical Assistance and Dispute Resolution

AT
Control No. 36633
Enclosure